5 things to know about the CPP expansion
Say goodbye to the ORPP
GST holiday break: Is it good for Canada’s economy?
Economists share how the temporary tax cut and relief cheques may play into Canada’s growth picture.
VANCOUVER – Finance Minister Bill Morneau met his provincial and territorial counterparts in Vancouver on Monday and reached an agreement with most of them to expand the Canada Pension Plan. Here are five things to know about CPP and the proposed deal:
1) The system is designed so that each generation of workers pays for its own retirement. That makes it different from two other income replacement programs for seniors and retirees: old age security (OAS) and the guaranteed income supplement (GIS). Those measures are covered through general tax revenues, meaning that workers today pay taxes to raise the incomes of poorer seniors.
How CPP payouts work when you already have a pension »
2) CPP premiums have only been raised once in the last 20 years. In 1997, finance ministers agreed to a phased-in increase in premiums to ensure one generation of workers wasn’t paying for another generation’s retirement. The argument today is that the CPP should pay more in benefits and help those who aren’t saving enough for retirement. The argument against raising premiums is that it would hit workers’ wallets at a time when governments keep saying the economy is fragile.
3) Under Monday’s agreement, which would go into effect in 2019, an average Canadian worker earning about $55,000 will pay an additional $7 a month in 2019. That would increase to $34 a month by 2023. Once the plan is fully implemented, the maximum annual benefits will increase by about one-third to $17,478 from $13,110.
How CPP changes affect employees »
4) Not every province has to have the CPP. Quebec has its own version. Saskatchewan has its own pension plan, but the payments are voluntary, acting more like a RRSP. Along with Quebec, Manitoba didn’t sign onto the deal on Monday.
5) Ontario had planned to launch its own pension plan if changes weren’t made to CPP, but with Monday’s agreement-in-principle Canada’s most populous province said it will back away.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Related Articles
MoneySense at the MoneyShow: ETFs & Investing Strategies
Here’s how to get your free ticket to attend the MoneyShow virtual expo.
Nvidia’s earnings: Blackwell AI chips play into (another) stock price rise
Nvidia beats earnings expectations as investors eye demand for Blackwell AI chips.
Bitcoin approaches USD$100,000 as post-election rally continues
The world’s biggest cryptocurrency topped USD$98,000 on Nov. 21. As it inches ever closer to six figures, investors wonder:...
Canada’s inflation rate increased to 2% in October
Canada’s inflation rate rose to 2% last month, up from 1.6% in September, but a December interest-rate cut is...
Inflation is on target in Canada, so why is food (and other stuff) still so expensive?
Why Canadians are still feeling the squeeze of high food costs, and what to do about it.
Deal or no deal: What to know before shopping Black Friday and Cyber Monday sales
If you’re one of the many Canadians looking for Black Friday and Cyber Monday discounts, here’s how to know...
Where are rent prices headed in Canada?
A new Desjardins report predicts rent inflation will slow in the next few years.
Couldn’t get Eras Tour tickets? Industry practices, lack of competition could be to blame
High demand has made it challenging to get tickets for Taylor Swift and other big artists in Canada, and...